BTPs conquer the markets: record demand of 155 billion
Record request of 155 billion euros for the first BTPs of the year. A response welcomed with great favor by financial operators, especially in consideration of the possible reduction in interest rates by the European Central Bank (ECB) during 2024. This assessment is reported by La Stampa. Italian political stability allows the Treasury to successfully place the first government bonds of the year. Citi, a US bank, observes that the move by the Ministry of Economy was “unexpected” but received robust demand without hedge fund support.
The placement of the 7-year BTP, with a volume of 10 billion, generated requests for 73 billion. In the case of the 30-year BTP, issued for 5 billion, demand was 82 billion. The spread applied to the seven-year bond compared to the BTP expiring in November 2030 was six basis points, bringing the rate to 3.54%, while in the case of the thirty-year bond, the spread was 21 basis points compared to the 2052 BTP, with a rate of 4.51%. The placement was handled by a pool of banks made up of Crédit Agricole, Deutsche Bank, Goldman Sachs, JP Morgan and Mps.
The deal was described as a very significant ask, with comparisons made to the green bond issued in April 2023, which had a duration of 8 years. Giovanni Cuniberti of Cuniberti e Partners highlights the Treasury's ability to attract significant capital despite global uncertainty. Fabrizio Pagani, senior advisor of Vitale e Co, adds an element of convenience, linked to the prospects of the ECB's future moves. Pagani states that, considering the almost complete victory in the fight against inflation, yields become attractive, especially in the prospect of a reduction in rates by central banks.
With yields falling, institutional investor confidence in Italy is increasing, a result that was not to be taken for granted. Now the attention moves on to the Treasury's next actions. Despite the challenge, market demand is high. The real testbetween now and the end of the year, will be to place the over 500 billion euros expected for 2024.
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